We establish an alternative form of expressing the covered interest parity model that incorporates the onshore and offshore foreign exchange forward market of inflation targeting economies of Emerging Asia, which provides the ability to identify if there is the occurrence of covered interest...

Covered interest parity fails to occur in both the onshore and offshore currency forward markets for emerging Asia. The deviation is largely influenced by a two-tier currency forward market given the barriers to capital flow, with the exception of Hong Kong. The structural difference between...